Divorce and Financial planning in Hong Kong: What to do and where to start

24 February, 2016

4 Min Read

No one relocating to Hong Kong expects their marriage to end in divorce. But the unthinkable can and does occur – and, when it does, a financial planner can help you take control of the divorce process and get a clear picture of your financial future. We put a few questions about it to the experts at The Fry Group.

What makes financial planning advice so important in a divorce?

Planning for the future is an essential part of every divorce settlement. Separating or divorcing couples often face major transformations in each of their financial circumstances and the ramifications can be devastating. The bottom line is that two households must survive on the same dollars formerly supporting one. A financial planner who has experience of dealing with people in this situation is an excellent resource for couples when they choose to go their separate ways.

At what point in divorce proceedings should a financial planner be called upon?

Financial planners have traditionally worked with individuals after divorce, helping them build new lives and plan for the future. However, being involved at an early stage the financial planner is well placed to assist in integrating the methodology of planning directly into the divorce process. Since settlements are in large part financial, an experienced planner can help explain options, help you set priorities, and lead you through the hard choices ahead. Often the financial data on which settlements are based is unreliable; this leads to future problems for one or both parties. Accurate financial information helps the parties achieve workable settlements more quickly and helps them accept realistic lifestyle changes when necessary.

What are some of the questions to consider when it comes to dividing assets?

Planning for your future as well as your children’s is an essential part of every divorce settlement, and your financial planner can play an important role in this. The division of assets can be projected to determine future needs. The cost basis of the assets must be identified, because that ultimately affects the net outcome. You need to consider;

How long will the money last?

What income can be generated?

Is the settlement adequate, or will living hand to mouth be a fear for the future?

Should the house be sold, and if so when?

What changes can be made to the division of assets or maintenance/child support, to create a more equitable (this doesn’t mean equal – it means what is fair) distribution?

What are some key ways that a financial planner can help during the settlement?

A planner can add real value by helping to demonstrate the current and future impact of separating the different assets and the affect this has on living standards, cash flow and future lifestyle changes. The transfer of assets should also include the tax implications and analysis can be done on this to determine the impact on assets such as homes, businesses and investment gains/losses that would be attributed to when and if the asset is sold. The net value must be looked at more than the gross value of the marital assets – equitable versus equal.

What about afterwards?

Once the divorce is finalised, a planner can help you achieve a clear understanding of your future financial picture, reviewing budgeting and expenditure, helping with investment diversification and managing your investments to meet your needs. They can help you put in place a financial plan for your future and can work closely with you to help you achieve this.

For a no-cost initial consultation about financial planning, call one of the experts from The Fry Group’s Hong Kong office on 2526 9488 or email them at info@thefrygrouphk.com.